Real Estate

According to real-estate website StreetEasy, 12 of the condos in Manhattan currently listed at over $20 million have had their prices cut by 5 percent or more in recent months, while only 2 of them have seen any increase in their listing price. Among the cuts is a condo at 1 Central Park South. It’s been on the market for more than 250 days, and is now on sale at $45.5 million, $6.45 million less than its price a few weeks ago.

That’s just one of the indications that the market may be slowing down. Here are some others:

Turning one apartment into two

One developer recent chopped a $45 million listing at 10 Sullivan into 2 separate apartments. The 8,400 square feet property is now split into a 3,000 square foot listing for $11 million, and a 5,400 square foot listing at $29.5 million.

Waiting it out

Some sellers are acting cautious amid a perceived glut in supply. One developer had all the approvals he needed to start listing luxury units at 111 W. 57th St., but he has decided to hold off, saying “if you have a market where you think marketing would be ineffective for now, why would you launch and spend the money?”

Giving up

Some are choosing to abandon plans for new real-estate projects all together. Earlier this year, developers who had planned to convert Manhattans Sony Building into ultra-luxury condominiums agreed to sell the tower for more than $1.4 billion instead of developing the flats themselves.

Loans are getting harder to find

Building luxury condos takes some financing, and that market is drying up a little. In May, New York luxury-condo builder Extell Development Co. said construction financing for One Manhattan Square was taking longer than expected.

Land sitting idle

There are signs that the land used to build luxury condos may be seeing less interest at the high prices sellers are asking. Brokerage Ariel Property Advisors said that a mere 48 land deals were completed in the first half of 2016, compared with 79 in the year-earlier period.

Dwindling stock performance

Jitters are showing up in the stock market as well. Shares have been declining in both Toll Brothers Inc., the biggest U.S. luxury-home builder, and Equity Residential, the largest publicly traded U.S. multi-family owner.

According to the Bloomberg article, derived from Shoprite Holdings half year financial results for the period ending Dec 31st 2015: “Nigeria showed healthy sales growth despite a slump in the price of crude oil and foreign exchange controls”, Basson said.

The retailer plans to open six Nigerian stores by December, adding to the 16 currently trading, and will also set up a distribution center in Lagos in the next couple of months to improve product availability. The Nigerian government depends on crude oil for over 70% of its revenues and over 90% of its foreign exchange earnings – therefore; the steep drop in crude oil prices had dealt a major blow to the country’s foreign reserves and had put the Naira under great pressure versus the U.S. dollar.

As Michael Chudi Ejekam explains, “as a countermeasure, beginning in June 2015, the Central Bank of Nigeria (CBN) introduced a ban on the ability to access foreign exchange via the official exchange rate to purchase 41 items. The CBN also introduced other measures to essentially ration foreign reserves, making it more difficult for many businesses in Nigeria to secure U.S. Dollars to import key inputs. Many retailers, especially those that were import-dependent were hit hard, and have had challenges securing the Dollars to replenish their stock. Further, the sharp drop in the parallel market Naira exchange rate, meant that certain retailers effective dollar revenues from Nigeria sales would be reduced, with many being compelled to raise their prices materially. Shoprite on the other hand, secures 76% of the items that it sells in Nigeria from local suppliers, of which 38% are manufactured locally. Therefore, Shoprite’s results have been relatively insulated from the foreign exchange shocks and Shoprite avoided material price increases. The resulting earnings, demonstrate that Shoprite’s business model is smart and defensive and well suited for an emerging market like Nigeria. Other retailers should pay close attention…and learn!”

About Michael Chudi Ejekam

Michael Chudi Ejekam is a renowned leader in the “retail revolution”. He is a widely quoted retail thought leader, with strong local business and government relationships. Michael Chudi Ejekam served as Director Real Estate for W Africa for Actis, a $7.5 B private equity firm- most active retail developer in Sub-Saharan Africa (ex SA) for 7+ years. Ejekam originated $700+M in retail projects. Projects include $100MIkeja City Mall Lagos, $120M Jabi Lake Mall Abuja and Accra Mall. Other projects include Heritage Place, Nigeria’s first green certified commercial building. Originated three upcoming Nigeria malls ranging from $150-185M each totaling over 40,000m2 each, which would be largest in the region.

Michael Chudi Ejekam started his career on Wall Street, as an investment banker at Merrill Lynch in New York.

He graduated with Honors from the Wharton School, University of Pennsylvania, with BSc in Economics with a Concentration in Finance. He received the Howard E Mitchell Award for academic excellence and extracurricular contributions. Learn more about Michael Chudi Ejekam here.

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Michael Chu'di Ejekam

Michael Chu'di Ejekam is a Commercial Real Estate Developer born in Nigeria. He is a graduate of "The Wharton School of the University of Pennsylvania", a private Ivy League university business school located in Philadelphia.